HANOVER - Says No to Statutory Management

The Manawhatu evening Standard Website has an article that states Hanover has dismissed demands by an investor interest group to put the failed finance company under statutory management. The group is of course EUFA.

It was reported that CFO Peter Fredricson said statutory management was not considered as an alternative option to the company's moratorium plan being put to investors on December 9.

The following is a quote of Mr Fredricson:

"The alternative in all likelihood looks like being receivership. In the discussions we have had with the trustees' advisors, PricewaterhouseCoopers and KordaMentha, nobody considered this concept of statutory management," Mr Fredricson said.

Technically this is correct as it is the Securities Commission that sanctions Statutory Management and would never be on the table with the board at Hanover.

On the Ministry of Economic developements website re Statutory Management point 6.1 states: (Link below)

" The Commission identifies three potential benefits of statutory management as an insolvency procedure"

it provides an extraordinary procedure for business rehabilitation;
it enables insolvencies involving groups of companies to be dealt with as a whole; and
it provides an emergency measure for ensuring the continuing supply of essential services if the providing companies are faced with collapse."
Continued 6.1

"That statutory management should be preserved as a remedy of last resort to be used if"
the affairs of a corporation cannot adequately be dealt with by any other formal and collective insolvency regime; or
the public interest requires it to be used.
http://www.med.govt.nz/templates/MultipageDocumentPage____6048.aspx

The article also states that the former Labour government commerce minister Lianne Dalziel rejected an application to appoint a statutory manager to another failed financier, Blue Chip, in May.

In a meeting with the then Minister of Commerce in March of this year Lianne Dalziel discussed statutory management with EUFA coordinator Suzanne Edmonds and EUFA finance Spokesman Gray Eatwell. Mrs Edmonds said from Tauranga today “Lianne Dalziel told both Gray and I if Jeff [Meltzer] wants statutory Management then he will get it..........At the time the Minster was clearly frustrated with us over our insistence for government intervention”

Hanover do not have the power to make the decision over Statutory Management.